World Markets Weekend Review: Yet Deeper In The Red

For the second consecutive week, all eight of our world indexes in this series fell deeper into negative territory. The Shanghai Composite had the best (make that “least bad”) performance, with loss of 1.50%. The DAX fared the worst, losing 5.30%, with the S&P 500 coming in next to last in what was widely announced as the worst Thanksgiving week performance in US markets since 1932. Special recognition also goes to the Nikkei and Sensex, both of which closed the week at new lows for the year.

The eurozone will continue to be a major focus next week, with all eyes on the yield spreads … except for those of us in the US, who will also be watching preliminary reports on the holiday shopping season.

As I pointed out last week, we’re nearing the time of year when investment companies are pondering the odds of a year-end rally. After all, there are only five weeks left in 2011. Of our International gang of eight, none is showing a year-to-date gain. The S&P 500, which was fractionally positive two weeks ago last week, is still best YTD performer, off 7.87%, with the FTSE a distant second, down 12.46%. All the other markets are sporting double-digit losses thus far in 2011, with five of the eight down more than 20%.

The tables below provide a concise overview of performance comparisons over the past four weeks for these eight major indexes. I’ve also included the average for each week so that we can evaluate the performance of a specific index relative to the overall mean and better understand weekly volatility. The colours for each index name help us visualise the comparative performance over time.

The chart below illustrates the comparative performance of World Markets since March 9, 2009. The start date is arbitrary: The S&P 500, CAC 40 and BSE SENSEX hit their lows on March 9th, the Nikkei 225 on March 10th, the DAX on March 6th, the FTSE on March 3rd, the Shanghai Composite on November 4, 2008, and the Hang Seng even earlier on October 27, 2008. However, by aligning on the same day and measuring the per cent change, we get a better sense of the relative performance than if we align the lows.

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A Longer Look Back

Here is the same chart starting from the turn of 21st century. The relative over-performance of the emerging markets (Shanghai, Mumbai, Hang Seng) is readily apparent.

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Check back next weekend for a new update.

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